Attached files
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2011
oTransition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
For the transition period from N/A to N/A
Commission File No. 000-51697
Bridgetech Holdings International, Inc.
(Name of small business issuer as specified in its charter)
| Delaware | 21-1992090 | |
| State of Incorporation | IRS Employer Identification No. |
777 South Highway 101, Suite 215, Solana Beach, CA 92075
(Address of principal executive offices)
(858) 847-9090
(Issuer’s telephone number)
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value per share
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days: Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non–accelerated filer. See definition of “accelerated filer large accelerated filer” and “Smaller reporting company” in Rule 12b–2 of the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer o Non–Accelerated filer o Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act). Yes x No o
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Class
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Outstanding at August 15, 2011
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|
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Common stock, $0.001 par value
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96,937,044
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BRIDGETECH HOLDINGS INTERNATIONAL, INC.
INDEX TO FORM 10-Q FILING
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011
TABLE OF CONTENTS
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Page Numbers
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PART I - FINANCIAL INFORMATION
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Item 1.
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Consolidated Financial Statements (unaudited)
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1 |
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Consolidated Balance Sheets
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2
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Consolidated Statements of Operations
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3
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Consolidated Statements of Cash Flows
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4
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Notes to Consolidated Financial Statements
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5
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Item 2.
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Management Discussion and Analysis of Financial Condition and Results of Operations
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9
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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12
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Item 4.
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Controls and Procedures
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13
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PART II - OTHER INFORMATION
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Item 1.
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Legal Proceedings
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13
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Item 1A.
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Risk Factors
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13
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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13
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Item 3.
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Defaults Upon Senior Securities
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13
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Item 4.
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Removed and Reserved
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13
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Item 5.
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Other information
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13
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Item 6.
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Exhibits
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13
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CERTIFICATIONS
| Exhibit 31 – Management certification | 16-17 | |
| Exhibit 32 – Sarbanes-Oxley Act | 18-19 |
-i-
PART I – FINANCIAL INFORMATION
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Item 1.
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Interim Consolidated Financial Statements and Notes to Interim Consolidated Financial Statements
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General
The accompanying interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2010. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature, except for the restatement adjustments included herein (see Note 2 – Restatement for Correction of an Error). Operating results for the Three and Six Months ended June 30, 2011 are not necessarily indicative of the results that can be expected for the year ending December 31, 2011.
-1-
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BRIDGETECH HOLDINGS INTERNATIONAL, INC.
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(Development Stage Company)
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CONSOLIDATED BALANCE SHEETS
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June 30,
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December 31,
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2011
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2010
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ASSETS:
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CURRENT ASSETS
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Cash
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$ |
-
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$ |
-
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Total current assets
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-
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-
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TOTAL ASSETS
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$ |
-
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$ |
-
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LIABILITIES AND STOCKHOLDERS' DEFICIT:
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CURRENT LIABILITIES:
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||||||
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Accounts payable and accrued liabilities
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$ |
1,073,689
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$ |
1,067,265
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Accrued liabilities
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829,921
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889,921
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Accounts payable - related party
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831,039
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1,265,392
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Accrued interest
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1,311,617
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1,098,379
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Note payable affiliate
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561,511
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561,511
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Notes payable - current
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5,380,265
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5,380,265
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Total current liabilities
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9,988,042
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10,262,732
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Total liabilities
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9,988,042
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10,262,732
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COMMITMENTS AND CONTINGENCIES
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-
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-
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STOCKHOLDERS' DEFICIT:
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Series A 8% cumulative convertible preferred stock, $.0002 par value
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10,000,000 shares authorized, 100,000 issued and outstanding
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on June 30, 2011 and December 31, 2010, respectively
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200
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200
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Common stock, $.0001 par value, 100,000,000 shares authorized; 96,937,044 and
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70,852,030 issued and outstanding on June 30, 2011 and December 31, 2010, respectively
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96,937
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70,852
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Additional paid-in capital
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49,945,366
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49,097,602
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Accumulated deficit - re-entered development stage January 1, 2009
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(1,700,841
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) |
(1,101,681)
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Accumulated deficit
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(58,329,704
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) |
(58,329,705)
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Total stockholders' deficit
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(9,988,042
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) |
(10,262,732)
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LIABILITIES AND STOCKHOLDERS' DEFICIT:
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$ |
-
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$ |
-
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The accompanying notes are an integral part of these consolidated financial statements.
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-2-
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BRIDGETECH HOLDINGS INTERNATIONAL, INC.
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(Development Stage Company)
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CONSOLIDATED STATEMENTS OF OPERATIONS
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FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010 AND FOR THE PERIOD
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FROM JANUARY 1, 2009 (RE-ENTERED THE DEVELOPMENT STAGE) THROUGH JUNE 30, 2011
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For the Period
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Three months ended
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Six months ended
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from January 1, 2009
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2011
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2010
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2011
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2010
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through June 30, 2011
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Restated
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Restated
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REVENUES:
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Revenues
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$ | - | $ | - | $ | - | $ | - | ||||||||||||
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OPERATING EXPENSES:
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General and administrative expenses
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95,940 | 30,000 | 385,922 | 60,000 | $ | 685,922 | ||||||||||||||
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Total operating expenses
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95,940 | 30,000 | 385,922 | 60,000 | 685,922 | |||||||||||||||
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OPERATING LOSS
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(95,940 | ) | (30,000 | ) | (385,922 | ) | (60,000 | ) | (685,922 | ) | ||||||||||
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OTHER (INCOME) EXPENSE:
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Interest expense
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106,619 | 106,619 | 213,238 | 213,238 | 1,014,919 | |||||||||||||||
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TOTAL OTHER (INCOME) EXPENSE
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106,619 | 106,619 | 213,238 | 213,238 | 1,014,919 | |||||||||||||||
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NET LOSS
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$ | (202,559 | ) | $ | (136,619 | ) | $ | (599,160 | ) | $ | (273,238 | ) | $ | (1,700,841 | ) | |||||
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NET LOSS PER SHARE:
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Basic and Diluted:
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$ | (0.002 | ) | $ | (0.002 | ) | $ | (0.006 | ) | $ | (0.004 | ) | ||||||||
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WEIGHTED AVERAGE SHARES OUTSTANDING:
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Basic and Diluted:
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96,937,044 | 70,852,030 | 95,639,999 | 70,852,030 | ||||||||||||||||
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The accompanying notes are an integral part of these consolidated financial statements.
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-3-
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BRIDGETECH HOLDINGS INTERNATIONAL, INC.
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(Development Stage Company)
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010 AND FOR THE PERIOD
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FROM JANUARY 1, 2009 (RE-ENTERED THE DEVELOPMENT STAGE) THROUGH JUNE 30, 2011
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For the Period
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from January 1, 2009
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2011
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2010
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through June 30, 2011
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net Loss
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$ | (599,160 | ) | $ | (273,238 | ) | $ | (1,700,841 | ) | |||
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Adjustments to reconcile net loss to net cash
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(used in) operating activities:
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Common stock issued for services
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258,182 | - | 298,182 | |||||||||
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Changes in operating assets and liabilities:
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Accounts payables
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6,424 | - | 6,424 | |||||||||
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Accrued liabilities
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60,000 | 60,000 | 180,000 | |||||||||
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Accounts payables - related party
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61,315 | - | 201,315 | |||||||||
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Accrued interest
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213,238 | 213,238 | 1,014,920 | |||||||||
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Net cash used in operating activities
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$ | - | $ | - | $ | - | ||||||
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INCREASE IN CASH
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- | - | - | |||||||||
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CASH, BEGINNING OF PERIOD
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- | - | - | |||||||||
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CASH, END OF PERIOD
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$ | - | $ | - | $ | - | ||||||
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SUPPLEMENTAL CASH FLOW INFORMATION:
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Income Taxes Paid
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$ | - | $ | - | $ | - | ||||||
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Interest Paid
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$ | - | $ | - | $ | - | ||||||
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NON-CASH INVESTING AND FINANCING ACTIVITIES:
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Common stock issued for settlement of accrued liabilities
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$ | 615,667 | $ | - | $ | 615,667 | ||||||
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The accompanying notes are an integral part of these consolidated financial statements.
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-4-
BRIDGETECH HOLDINGS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
NOTE 1 – BUSINESS AND NATURE OF OPERATIONS
Bridgetech Holdings International, Inc. was a company focused primarily on the business of facilitating the transfer of medical drugs, devices and diagnostics from the United States to China and other international locations. We are no longer in this business. The entity that is the original predecessor of the Company was originally incorporated in Delaware on June 4, 1991. As of January 1, 2009, the Company ceased operations of its medical imaging business and has discontinued operations of all of the its business activity including those of its wholly-owned subsidiaries, Parentech, Inc., Retail Pilot, Inc., International MedLink, Inc., and Clarity Imaging International, Inc. As a result of discontinuing all of its previous operations, the Company re-entered the development stage effective January 1, 2009. The Company currently has no operations. As of the date hereof, we have not been successful in any of our prior business operations.
The consolidated financial statements of Bridgetech Holdings International, Inc. include the accounts of its wholly-owned subsidiaries, Parentech, Inc., Retail Pilot, Inc. D/B/A Healthcare Pilot (“Retail”), and International MedLink, Inc. (“MedLink”), Clarity Imaging and a 67% owned subsidiary, Amcare. None of the Company’s subsidiaries have current operations.
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern. However, the Company has a working capital deficit, has no cash on hand, is in default of its outstanding debt agreements and has not generated revenues since it re-entered the development stage on January 1, 2009. During the six months ended June 30, 2011, the Company incurred a net loss of $599,160 and at June 30, 2011 has an accumulated deficit of $60,030,545. Additionally, on July 6, 2011, the Company filed for bankruptcy and proceeding is pending in the Southern District of California. The accompanying financial statements due not include any adjustments related to the bankruptcy filing. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The Company is dependent upon funds from private investors and the support of certain stockholders. Management is proposing to reorganize the Company in bankruptcy and, once the Company emerges from bankruptcy, raise any necessary additional funds through loans and additional sales of its common stock. There is no assurance that the Company will be successful in reorganizing or emerging from bankruptcy or in raising additional capital. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
NOTE 2 – RESTATEMENT FOR CORRECTION OF AN ERROR
The Company has restated its previously issued June 30, 2010 consolidated financial statements for matters related to the following previously reported items: accounts payable, account payable-related party, accrued interest, note payable-related parties, notes payable and the related interest expense. The accompanying financial statements for June 30, 2010 have been restated to reflect the corrections.
The following is a summary of the restatements for June 30, 2010:
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Decrease in accounts payable for a reclassification to accounts payable – related party
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$ | 1,125,392 | ||
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Increase in accrued interest due to: (1) accrual of additional interest expense of $588,443, (2) a reclassification from note payable to accrued interest of $296,698, and (3) a $140,000 reclassification from note payable - related party to accrued interest
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$ | 1,025,141 | ||
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Increase in accrued liabilities due to accrual of salaries of $60,000
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$ | 60,000 | ||
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Increase in accumulated deficit due to accrual of interest expense of $588,443 and salaries of $60,000.
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$ | 648,443 |
-5-
The effect on the Company's previously issued June 30, 2010 financial statements is summarized as follows:
Balance Sheet as of June 30, 2010:
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Previously
Reported
|
Increase
(Decrease)
|
Restated
|
||||||||||
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Current Assets
|
$ | - | $ | - | $ | - | ||||||
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Total Assets
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$ | - | $ | - | $ | - | ||||||
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Current Liabilities
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$ | 9,341,051 | $ | 648,443 | $ | 9,989,494 | ||||||
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Total Liabilities
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9,341,051 | 648,443 | 9,989,494 | |||||||||
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Stockholders’ Deficit:
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||||||||||||
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Accumulated Deficit— re-entered development stage
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- | (828,443 | ) | (828,443 | ) | |||||||
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Accumulated Deficit
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(58,509,705 | ) | 180,000 | (58,329,705 | ) | |||||||
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Total Stockholders’ Deficit
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$ | (9,341,051 | ) | (648,443 | ) | $ | (9,989,494 | ) | ||||
Statement of Operations for the Six Months Ended June 30, 2010:
|
Previously
Reported
|
Increase
|
Restated
|
||||||||||
|
General and Administrative Expenses
|
$ | - | $ | 60,000 | $ | 60,000 | ||||||
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Loss from Operations
|
- | - | ||||||||||
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Interest Expense
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- | 213,238 | 213,238 | |||||||||
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Net Loss
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$ | - | $ | (273,238 | ) | $ | (273,238 | ) | ||||
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows:
Principles of Consolidation
The consolidated financial statements include the accounts of Bridgetech Holdings International, Inc., Parentech, Inc., Retail Pilot, Inc. D/B/A Healthcare Pilot, International MedLink, Inc., Amcare and Clarity International, Inc. All significant intercompany transactions have been eliminated.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net sales and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates.
Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.
-6-
Income Taxes
Deferred income taxes are provided to reflect the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740; "Accounting For Uncertainty In Income Taxes-An Interpretation Of ASC Topic 740 ("ASC Topic 740") contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At June 30, 2011 the Company did not record any liabilities for uncertain tax positions.
Earnings Per Share
Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options, warrants, and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. Diluted loss per share is the same as basic loss per share for all periods presented because the effects of the additional securities, a result of the net loss, would be anti-dilutive.
Reclassification
Certain prior period amounts have been reclassified to conform to current period presentations.
Recent Accounting Pronouncements
The Company’s management does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
NOTE 4 – EQUITY
Share Based Compensation
On January 9, 2011, the Company granted 18,378,141 common shares to the Company’s President in satisfaction of accrued but unpaid employment compensation, and 355,617 common shares to Small World Traders, LLC, (of which the President is a member but disclaims direct or indirect beneficial ownership or control) for expenses paid by Small World Traders, LLC, on behalf of the Company. The number of shares issued was computed at $.0163/share by the Company based on the greater of the Average Weighted Price for December 2010, $.0163/share; the Average Price for December 2010, $.006/share; and the Average Price over the period of compensation, (1/2009 - 12/2010), $.0041/share. Using quoted market prices, on the date of grant, $.0334/share, they are valued at $615,667 and $11,913 respectively. The shares last traded at $.003 on 7/28/2011.
-7-
On January 9, 2011, the Company granted 3,675,628 common shares to an outside consultant for accounting and financial services rendered. The number of shares issued was computed at $.0163/share by the Company based on the greater of the Average Weighted Price for December 2010, $.0163/share; the Average Price for December 2010, $.006/share; and the Average Price over the period of compensation, (1/2009 - 12/2010), $.0041/share. Using quoted market prices, on the date of grant, $.0334/share, they are valued at $123,134. The shares last traded at $.003 on 7/28/2011.
On January 9, 2011, the Company granted 3,675,628 common shares to a consultant for legal services rendered. The number of shares issued was computed at $.0163/share by the Company based on the greater of the Average Weighted Price for December 2010, $.0163/share; the Average Price for December 2010, $.006/share; and the Average Price over the period of compensation, (1/2009 - 12/2010), $.0041/share. Using quoted market prices, on the date of grant, $.0334/share, they are valued at $123,134. The shares last traded at $.003 on 7/28/2011.
Warrants
The Company has the following warrants outstanding and exercisable as of June 30, 2011.
|
Date issued
|
Warrants
|
Exercise
|
|||||||
|
Issued
|
Price
|
Expire
|
|||||||
|
December 23, 2006
|
240,000 | 1.50 |
None
|
||||||
Warrants for 200,000 common shares issued April 27, 2007 with an exercise price of $1.00 expired, unexercised, on April 27, 2011. The outstanding warrants at June 30, 2011 have no intrinsic value and no expiration date.
NOTE 5 – SUBSEQUENT EVENTS
The Company filed for Chapter 11 Bankruptcy on July 6, 2011 and the proceeding is pending in the Southern District of California, Case # 11-11264-PB11.
In accordance with ASC 855, the Company evaluated subsequent events through the date these financial statements were issued. There were no other material subsequent events that required recognition or additional disclosure in these financial statements.
* * * * * *
-8-
ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Discussion and Analysis contains various “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding future events or the future financial performance of the Company that involve risks and uncertainties. Certain statements included in this Form 10-Q, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to “anticipates”, “believes”, “plans”, “expects”, “future” and similar statements or expressions, identify forward looking statements. Any forward-looking statements herein are subject to certain risks and uncertainties in the Company’s business, The Company adopted at management’s discretion, the most conservative recognition of revenue based on the most astringent guidelines of the SEC in terms of recognition of software licenses and recurring revenue. Management will elect additional changes to revenue recognition to comply with the most conservative SEC recognition on a forward going accrual basis as the model is replicated with other similar markets (i.e. SBDC). The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth therein.
Forward-looking statements involve risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results and achievements and cause them to materially differ from those contained in the forward-looking statements include those identified in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.
In addition, the foregoing factors may affect generally our business, results of operations and financial position. Forward-looking statements speak only as of the date the statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements.
Except for historical information contained herein, the following discussion contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements include, but are not limited to, statements regarding future events and the Company’s plans and expectations. Actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed elsewhere in this Form 10-Q or incorporated herein by reference, including those set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations.
As used in this annual report, “we”, “us”, “our”, “Bridgetech”, “Bridgetech Holdings” “Company” or “our company” refers to Bridgetech Holdings International, Inc. and all of its subsidiaries.
Overview
Our company, Bridgetech Holdings International, Inc., was a company focused primarily on the business of facilitating the transfer of medical drugs, devices and diagnostics from the United States to China and other international locations. We are no longer in this business.
Corporate History
The entity that is the original predecessor of our company was originally incorporated in Delaware on June 4, 1991. From 1991 through 2002, this predecessor, which was originally named “Huggie Heart, Inc.,” engaged in several different businesses, a merger and several similar corporate transactions, and changed its name several times. In November 2002, this entity acquired Parentech, Inc., a Delaware corporation, and changed its name to “Parentech, Inc.”
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From its acquisition of Parentech, Inc. until the end of 2004, our primary business was designing, developing, and marketing products intended to enhance the well-being of infants. This business, however, generated only minimal revenues and could not support our ongoing operations.
On January 10, 2005, Herbert Wong and Scott Landow formed Bridgetech Holdings International, Inc. under the laws of the State of Florida (“Old Bridgetech”). Old Bridgetech, which was privately-held, was formed to facilitate the transfer of medical drugs, devices and diagnostics from the United States to China and other international locations.
In February 2005, we entered into a transaction with Old Bridgetech whereby we issued 1,673,438 shares of our common stock to the shareholders of Old Bridgetech in exchange for all of the outstanding stock of Old Bridgetech. In connection with this transaction, we changed our name to “Bridgetech Holdings International, Inc.”
We are not actively developing this business and have ceased operations of all other businesses conducted by Parentech, Inc. prior to the transaction with Old Bridgetech.
As of January 1, 2009, we ceased operations of our medical imaging business and have discontinued operations of all of our business activities including of Parentech, Inc., Retail Pilot, Inc., International MedLink, Inc., Amcare and Clarity Imaging International, Inc.
We are now an entity with no operations. As of the date hereof, we have not been successful in any of our prior business operations.
Historically, we were able to raise a limited amount of capital through private placements of our equity stock, but we are uncertain about our continued ability to raise funds privately.
Our management has been analyzing the various alternatives available to us to ensure our survival and to preserve our shareholder's investment in our common shares. This analysis has included sourcing additional forms of financing to continue our business as is, or mergers and/or acquisitions. At this stage in our operations, we believe either course is acceptable, as our operations have not been profitable and our future prospects for our business are not good without further financing.
We are focusing our preliminary merger/acquisition activities on potential business opportunities with established business entities for the merger of a target business with our company. In certain instances, a target business may wish to become a subsidiary of our company or may wish to contribute assets to our company rather than merge. We anticipate that any new acquisition or business opportunities by our company will require additional financing. There can be no assurance, however, that we will be able to acquire the financing necessary to enable us to pursue our plan of operation. If our company requires additional financing and we are unable to acquire such funds, our business may fail.
In implementing a structure for a particular business acquisition or opportunity, we may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. Upon the consummation of a transaction, it is likely that our present management will no longer be in control of our company and our existing business will close down. In addition, it is likely that our officers and directors will, as part of the terms of the acquisition transaction, resign and be replaced by one or more new officers and directors.
We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. Management believes that there are numerous firms in various industries seeking the perceived benefits of being a publicly registered corporation. Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
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We may seek a business opportunity with entities that have recently commenced operations, or entities that wish to utilize the public marketplace in order to raise additional capital in order to expand business development activities, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.
At this stage, we can provide no assurance that we will be able to locate compatible business opportunities, what additional financing we will require to complete a combination or merger with another business opportunity or whether the opportunity's operations will be profitable.
If we are unable to secure adequate capital to continue our business or alternatively, complete a merger or acquisition, our shareholders will lose some or all of their investment and our business will likely fail.
Other than as set out herein, we have not entered into any formal written agreements for a business combination or opportunity. If any such agreement is reached, we intend to disclose such an agreement by filing a current report on Form 8-K with the Securities and Exchange Commission.
The Company filed a Chapter 11 Bankruptcy on July 6, 2011 and proceeding is pending in the Southern District of California Case # 11-11264-11.
THERE CAN BE NO ASSURANCES THAT NEGOTIATIONS WITH ANY PROSPECTIVE BUSINESS, INCLUDING BUT NOT LIMITED TO THE ENTITIES DISCUSSED ABOVE, WILL RESULT IN A MERGER WITH OUR COMPANY OR THAT SUCH MERGER WILL RESULT IN PROFITABILITY.
RESULTS OF OPERATIONS
Three and Six Months Ended June 30, 2011, Compared to Three and Six Months Ended June 30, 2010
We currently have no operating activities. As of January 1, 2009, we ceased operations of our medical imaging business and have discontinued the prior operations of Parentech, Inc., Retail Pilot, Inc., MedLink International, Inc. Amcare and Clarity Imaging International, Inc.
We presently have no operations but our plan of operation is to identify and merge with a potential merger candidate/candidates to create new shareholder value and reestablish the Company going forward.
Six Months Ended June 30, 2011, Compared to Six Months Ended June 30, 2010
General and administrative expenses (“G&A”) totaled $385,922 for the six months ended June 30, 2011, compared to $60,000 in the 2010 period. G&A costs in 2011 and 2010 include the accrued salary of our sole officer and director totaling $60,000. G&A costs in 2011 also include legal and professional fees of approximately $258,000.
Interest expense was $213,238 for both 2011 and 2010. Interest expense includes accrued and unpaid interest on our debt with principal balances totaling approximately $5.4 million.
Three Months Ended June 30, 2011, Compared to Three Months Ended June 30, 2010
General and administrative expenses (“G&A”) totaled $95,940 for the three months ended June 30, 2011, compared to $30,000 in the 2010 period. G&A costs in 2011 and 2010 include the accrued salary of our sole officer and director totaling $30,000. G&A costs in 2011 also include legal and professional fees of approximately $66,000.
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Interest expense was $106,619 for both 2011 and 2010. Interest expense includes accrued and unpaid interest on our debt with principal balances totaling approximately $5.4 million.
LIQUIDITY AND CAPITAL RESOURCES
We currently have an accumulated deficit of approximately $60 million, current assets of $0, and current liabilities of approximately $10 million. We are currently in default on all of our debt and have been unable to raise the capital to pay such notes. Should the note holders call their notes, we would be unable to pay them. The total principal and interest from unpaid debt to unrelated third parties is approximately $7 million.
We do not presently generate any revenue to fund the planned development of our business. In order to develop our business plan, we will require funds for working capital. We do not presently have any firm commitments for additional working capital and there are no assurances that such capital will be available to us when needed or upon terms and conditions which are acceptable to us. If we are able to secure additional working capital through the sale of equity securities, the ownership interests of our current stockholders will be diluted. If we raise additional working capital through the issuance of debt our future interest expense will increase. We are currently in default on our all of our outstanding debt to unrelated third parties and have been unable to raise the capital to pay such notes. Should the debt holders call their notes, we would be unable to pay them.
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of our company as a going concern. However, we have a working capital deficit and have not generated revenues since we re-entered the development stage on January 1, 2009. During the six months ended June 30, 201, we incurred a net loss of $599,160 and at June 30, 2011 have an accumulated deficit of $60,030,545. These factors raise substantial doubt about the ability of our company to continue as a going concern. We are dependent upon funds from private investors and the support of certain stockholders. Management is proposing to raise any necessary additional funds through loans and additional sales of its common stock. There is no assurance that we will be successful in raising additional capital. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. The Company filed a Chapter 11 Bankruptcy on July 6, 2011 and proceeding is pending in the Southern District of California Case # 11-11264-11.
Additional Information
We file reports and other materials with the Securities and Exchange Commission. These documents may be inspected and copied at the Securities and Exchange Commission, Judiciary Plaza, 100 F Street, N.E., Room 1580, and Washington, D.C. 20549. You can obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. You can also get copies of documents that the Company files with the Commission through the Commission’s Internet site at www.sec.gov.
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ITEM 3.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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We do not hold any derivative instruments and do not engage in any hedging activities. We have no business activity as of the six month period ended June 30, 2011.
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ITEM 4. CONTROLS AND PROCEDURES
a) Evaluation of Disclosure Controls and Procedures.
Under the supervision and with the participation of our Chief Executive Officer and Principal Accounting Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this quarterly report. Based on this evaluation, our Chief Executive Officer and Principal Accounting Officer concluded as of June 30, 2011, that our disclosure controls and procedures were not effective such that the information required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Principal Accounting Officer, as appropriate to allow timely decisions regarding required disclosure. Our Chief Executive Officer concluded, based on the evaluation of the effectiveness of the disclosure controls and procedures by our management, that as of June 30, 2011, our disclosure controls and procedures were not effective due to the material weaknesses described in Management's Report on Internal Control over Financial Reporting as reported in our Form 10-K for the year ended December 31, 2010.
b) Changes in Internal Control over Financial Reporting.
During the quarter ended June 30, 2011, there was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries' officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
The Company filed a Chapter 11 Bankruptcy on July 6, 2011 and proceeding is pending in the Southern District of California Case # 11-11264-11.
ITEM 1A. - RISK FACTORS
Not required for smaller reporting companies.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS SECURITIES
On January 9, 2011, the Company granted 18,378,141 common shares valued at $615,667 using quoted market prices on the date of grant to the Company’s President in satisfaction of accrued but unpaid employment compensation, and 355,617 common shares valued at $11,913 using quoted market prices on the date of grant to Small World Traders, LLC, (of which the President is a member but disclaims direct or indirect beneficial ownership or control) for expenses paid by Small World Traders, LLC, on behalf of the Company.
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On January 9, 2011, the Company granted 3,675,628 common shares for consulting services rendered.
On January 9, 2011, the Company granted 3,675,628 common shares for legal services rendered.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the quarter ended June 30, 2011.
ITEM 4. REMOVED AND RESERVED
ITEM 5. OTHER INFORMATION
There is no information with respect to which information is not otherwise called for by this form.
ITEM 6. EXHIBITS
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31.1
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Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
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31.2
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Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.
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32.1
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Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.
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32.2
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Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Registrant
Date: August 19, 2011
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Bridgetech Holdings International, Inc.
By: /s/ Scott Landow
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Scott Landow
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Chairman, Chief Executive Officer
(Principle Executive Officer, Principle Financial Officer)
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